Gold declined, dropping below $1,700 for the first time in a month, as a stalemate in U.S. budget talks weighed on commodities, countering record assets in exchange-traded products. Silver, platinum and palladium fell. Spot gold lost as much as 1.1 percent to $1,696.78 an ounce, the least expensive since Nov. 6, and was at $1,706.04 at 3:40 p.m. in Singapore. Bullion for delivery in February declined 1 percent to $1,704.30 an ounce on the Comex, while oil and copper retreated. Holdings in ETPs, up 11 percent this year, gained to 2,623.446 metric tons yesterday, data compiled by Bloomberg show. U.S. lawmakers are trying to avert more than $600 billion in tax increases and spending cuts starting in January unless they agree to a new budget. House Republicans, rejecting President Barack Obama’s demand for higher tax rates, yesterday countered with a $2.2 trillion deficit-cutting plan. “Gold will be driven by sentiment in the broader financial markets in the near term as investors weigh the U.S. fiscal- cliff negotiations,� said Xiang Nan, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage. Gold may gain as businesses temper spending and stimulus falls short, John Gilbert, chief investment officer at General Re-New England Asset Management, a unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), wrote in a newsletter. Buffett said in a February letter that investors should avoid gold as it doesn’t have the potential of farmland or companies to produce wealth. Bullion of 99.99 percent purity on the Shanghai Gold Exchange fell for a second day, dropping as much as 1 percent to 340.60 yuan a gram ($1,701.86 an ounce), the least expensive in almost four weeks. Volumes for the benchmark cash contract were 4,404 kilograms yesterday from 3,705 kilograms on Nov. 30. Gold for June delivery slumped to a one-month low of 344.67 yuan. An interbank gold-trading platform started in China yesterday, with Bank of Communications Co. and Industrial and Commercial Bank of China Ltd. completing the first transaction, according to a statement from Bank of Communications. Cash silver fell 1 percent to $33.32 an ounce, spot platinum lost 0.8 percent to $1,592.50 an ounce, and palladium slipped 1.5 percent to $680.50 an ounce. To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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